Starting Groupon in Chicago Like “Recording Music on a 4-Track”

Groupon CEO Andrew Mason has had tremendous success in selling collective deals for local merchants online. But Mason — who’s created what’s now being called “the fastest growing company ever” out of the ashes of an unsuccessful collective-giving platform — today at the DEMO Conference attributed part of his startup’s success to being located in Chicago.

Groupon CEO Andrew Mason

“I kind of think about starting a business in Chicago as similar to recording music on a 4-track before I could do it on a computer,” Mason said.

What he means by that, Mason said, is “I think it’s good to operate within constraints.” Local startups that originate in Silicon Valley have developed technology to scale the process of engaging local merchants and targeting users, but with Groupon coming from Chicago, “We didn’t know enough to know you could do something like that,” Mason said. (Personally, my favorite Chicago quirk about Groupon is that the company hires most of its customer service reps out of the local theater scene.)

These days, Groupon has its own 25-person Silicon Valley technology office, after buying the app-development company Mob.ly to start it up. Geography is also why Mason has been sympathetic to Groupon clones from other regions, he said, having bought competitors CityDeal in Europe, Qpod in Japan and Darberry in Russia. “At first when I saw companies copying Groupon I was like ‘Are you serious?'” Mason said. “When they’re bringing it to new territory I guess I rationalize it as being a bit different.”

Mason said he also understands the demand for the abundance of U.S. Groupon competitors, because until recently Groupon only offered one deal per day per city. Mason called the company’s recent launch of “personalized” deals “the biggest thing we’ve done,” because it will add capacity for much more inventory. There are currently 35,000 businesses on the Groupon waitlist, which often takes six months.

Groupon is also looking to serve new users by providing local deals to readers of publishers like McClatchy. So far, Mason said, “We’ve found it’s difficult to take an audience that exists for one purpose and get them interested in something entirely different.”